March 2006

QDR Lays Out Strategy, But Can We Afford It?

March 2006

by Lt. Gen. Lawrence P. Farrell, Jr., USAF (Ret)

At first glance, the fiscal year 2007 defense budget reflects the arduous challenges facing the administration in trying to balance long-term strategy and requirements against immediate priorities and fiscal pressures.

On the one hand, the $439.3 billion budget provides a healthy level of resources in key areas, such as personnel, procurement, research and development, and force readiness.

IOn the other, the spending plan leaves unanswered serious questions about how the Defense Department will fund the ambitious strategy laid out in the Quadrennial Defense Review, which the administration released as a companion document to the fiscal 2007 budget.

The Defense Department describes the QDR as a continuation of threats, strategy and capability that has been developing for the last four years; also as a “mid-course correction” — nothing radically new. But when viewed as a whole, it seems fairly demanding. In a nutshell, it says that we must maintain our predominance in traditional warfare and improve the forces to address non-traditional asymmetric challenges. To do this, we need to defeat terror networks, defend the homeland, shape choices of countries at a crossroads, and prevent hostile states and non-state actors from acquiring or using WMD.

To underwrite this, the 2007 budget will begin to increase special operations forces, develop capability to counter bioterrorism, improve conventional and non-kinetic capabilities and develop capability to combat and eliminate WMD threats. The congressionally mandated QDR, for the first time, takes into account the demands of the nation’s campaign against terrorism and the prospect that the country could be engaged in a “long war.”

That all seems like a lot.

Pentagon officials describe the “long war” as a combination of prolonged irregular conflict — such as the current wars in Afghanistan and Iraq, and wider insurgent operations possibly in other parts of the world — such as the Philippines, the Horn of Africa and Georgia. They also cite humanitarian operations, as well as support of civil authorities at home.

The QDR is setting a challenge to not only expand mission portfolios but also to achieve these capabilities without neglecting traditional threats.

“We have been very successful in deterring the threat from large armies, navies and air forces,” says Defense Secretary Donald Rumsfeld. “Those threats haven’t disappeared.”

Pentagon officials say the budget proposed for fiscal year 2007 funds the capabilities needed to address those key areas outlined in the QDR.

Given all the above, it is far from clear exactly how the budget will be sufficient to do essentially what the services are doing today, plus much more. The budget, for example, funds an increase of 4,000 special operations forces (14,000 by fiscal year 2011), but assumes that the costs will be absorbed by personnel cutbacks in the conventional services.

The Pentagon wants to increase research-and-development spending by $7 billion — ostensibly to fund black programs to combat WMD proliferation. But it is offsetting that investment by a $7 billion reduction in procurement.

The $439.3 billion request is 4.8 percent larger than what Congress appropriated for 2006, but actually is nearly $4 billion less than what the administration projected a year ago for fiscal year 2007, with a procurement budget that is smaller than projected a year ago.

Also obscuring the budget picture are the supplemental funds that the Pentagon requests from Congress to cover war expenses. Since 2001, the Defense Department has received more than $320 billion in supplementals — with $120 billion expected for fiscal 2006 alone.

These supplementals make it difficult to tell what’s really being funded in the budget, and they mask a lot of funding issues, primarily procurement needs, many of which are fueled by the current conflict.

According to Pentagon Comptroller Tina Jonas, a $50 billion supplemental request last year included $16 billion for equipment replenishments. She further notes that the war in Iraq alone is costing $6.8 billion per month.

It’s not hard to see that we are adding more requirements into a procurement budget that, although still growing, is beginning to shrink from previous years’ projections. And yet we don’t see any cancellation of large programs, with the exception of ending the Air Force C-17 aircraft production by 2008.

Most major programs continue as planned. How are we going to pay for this?

A study by the non-partisan Center for Strategic and Budgetary Analysis says the Pentagon faces a significant mismatch between its long-term force structure and modernization plans, and projected funding levels for defense. “The defense budget is already high by historical standards,” wrote Steven Kosiak. “Unfortunately, the latest QDR would do little to improve the affordability of the Defense Department’s long-term plans.”

The sizeable supplementals have helped conceal this reality. But how long can we continue to expect these mega-buck infusions?

Without these huge financial assists, long-range plans, the force structure and acquisition would have to be revised in a major way.

It also appears that the broad picture of U.S. government spending does not bode well for any future increases to defense. Given the projected growth in federal entitlement programs, we would expect to see lots of pressure on defense in coming budget drills. In fiscal 2007, the growth in military spending is accompanied by cuts to domestic programs and entitlement benefits, which likely will stir opposition from lawmakers. And the federal budget deficit is projected to grow from $318 billion in 2005 to $423 billion in 2006.

At this stage, military and civilian leaders must begin to tackle the tough questions. It’s not just about cutting people or hardware, but rather about ensuring that the demanding missions outlined in the QDR are supported by adequate resources and that our forces, which are stretched thinner than ever, will be sustained to complete the job they are doing today, and be made ready for a potentially more challenging and uncertain future.

One key to understanding where this might go is to watch the supplemental appropriations process, Army and Marine Corps progress in resetting and recapitalizing their equipment, the Army’s modularity efforts, and the Air Force’s success with reducing its blue-suit force from 379,000 to 339,000. All this will play out over several years and will be instructive in assessing the success of QDR implementation.